Institutional investors are investors that trade on behalf of institutional clients such as corporations, labor unions, retirement funds, and college savings or 529 plans. The trading habits and needs of institutional investors are quite different from the trading habits and needs of individual investors. For example, institutional investors generally manage large sums of money, often purchasing and redeeming tens of millions of dollars worth of mutual funds on a daily basis. Similarly, institutional investors are often active market participants, and possess expert knowledge about the markets in which they trade. They often use that knowledge to capitalize on breaking news that effects market valuations and performance. Given the size and volume of their daily trading activity, settling the accounts of institutional investors often requires regular transfers of large amounts of cash. This is usually done via an electronic or wire transfer, and separate wire transfers are generally required every time a mutual fund is purchased. Thus, when several mutual fund purchases are made throughout a trading day, several wire transfers are required to settle those purchase transactions. Institutional investors are also subject to self-regulatory restrictions not placed on ordinary investors, which put limits on how institutional investors can invest their mutual funds. As a result, they often need to know certain information that non-institutional investors do not need to know. For example, to ensure compliance with self-regulatory rules, institutional investors often need to know the relative size of the positions they take in given mutual funds. While securities trading systems are known in the art, none are generally designed to provide the types of information and functionality that are needed by institutional investors, and particularly by institutional investors who trade in mutual funds.
Mutual fund providers likewise need tools to effectively manage transactions associated with their mutual funds, especially when such transactions pass through mutual fund trading platforms (also known as “portals”). Managers of mutual funds often settle, trade, or otherwise perform transactions with multiple platforms or portals, and each such platform or portal generally has multiple clients associated therewith. It is therefore often desirable for managers of such mutual funds to have access to more information related to transactions coming through one or more portals and affecting their mutual funds under management.
Returning now to institutional investors and other clients of mutual fund trading portals, it is desirable for such clients to perform the same types of transactions through such portals as are available to such clients trading directly with the mutual funds themselves. It is therefore desirable for mutual fund portals to be substantially free of limitations or other constraints not generally found when trading directly with such mutual funds.